Jul201106

Honesty compels me to admit, I think a lot of people have their heads in the clouds when it comes to the current relationship between manufacturing and jobs.

Just recently, President Obama earmarked $500 million to spur the development of high-tech manufacturing jobs. Meanwhile, cruise the blogosphere or surf your cable lineup at any point and you’ll find any number of people — from pundits to politicians — clamoring for a renewed emphasis on manufacturing.

Why? “Because that’s where the jobs are.”

Hey, I take a back seat to no one when it comes to appreciating the role that manufacturing plays in this country’s economy. But then again, anyone who believes that a pronounced uptick in this country’s manufacturing output will immediately translate into a full-scale spike in job growth, just doesn’t understand the fundamentals of manufacturing.

U.S. manufacturing these days is in the midst of a remarkable three-year recovery because for three years running manufacturing has not been about job growth.

It’s been about automation. It’s been about process improvement. It’s been about productivity. And it’s been about quality.

In fact, it’s been about reinventing the very process by which durable and disposable goods get manufactured.

What’s more, it’s been about streamlining our factories to the point that they’re now among the most efficient in the world.

That’s why America ‘s manufacturing sector has achieved such a dramatic turnaround, and that’s why our economy is slowly but surely working its way down the long road to recovery.

American manufacturers, like myself, simply have not been able to compete with the ridiculously low salaries being paid to workers in places like China and India. So we’ve had to try to one-up the offshore competition by out-innovating it, while at the same time embracing such things as computer design, laser technology, lean manufacturing and other recent game-changing manufacturing innovations.

Look, I know where those politicians and pundits are coming from when they call for a renewed emphasis on manufacturing. And most of them are right.

But they’re right for the wrong reasons. They say the word “manufacturing” and they see in their minds’ eyes things they used to see when they were kids.

They see workers lined up outside of a sprawling industrial campus, with its belching smokestacks and its massive storage facilities.

And they see thousands upon thousands of jobs, all paying the kind of wages that allow a man to send two or three kids to college, while leaving enough left over for him and the little lady to have a night out on the town every now and then.

Well, I hate to say it. But those days are gone. And those jobs are gone. What’s more, as Bruce Springsteen once sang, “they ain’t comin’ back.”

That’s not to say, of course, that manufacturing growth will not continue to translate into meaningful job growth — and meaningful careers — in this country. Because it will.

It’s just that it won’t translate into the massive quantities of jobs people still want to believe are possible. Nor will it translate into the kind of low-skilled jobs that once defined the assembly line dynamic.

In this day and age, companies like mine simply cannot afford to pay top dollar for workers whose skill sets do not extend beyond the ability to spot weld a piece of metal or maybe torque down a bolt or two.

Today’s lean manufacturing companies are looking for skilled workers who think like engineers and who bring to the job each day a broad knowledge of product design and product development.

Today, small, independent businessmen like myself are not so much looking for manufacturing cogs as we are manufacturing assets; people whose skills are essential to the process of designing, prototyping and manufacturing products for market.

America ‘s economic future will remain forever linked to our ability to manufacture quality goods. But the minute we start focusing more on this country’s ability to manufacture jobs than we do our ability to manufacture things is the minute we step out onto what promises to be a very slippery slope.

The great economist Milton Friedman was once visiting a developing country. He watched as hundreds of workers used shovels to build a bridge. When he asked why they were using shovels rather than machines, his host said, “Because using machinery would result in fewer jobs in the construction industry.”

“Oh,” Friedman replied, “I thought you were interested in building a bridge. If you want to create more jobs, why not give the workers spoons instead of shovels?”

11 Comments to “U.S. Manufacturing, Jobs Not as Cozy as They Once Were”

Perry, you say what I think. Absolutely 100% correct. There are no easy solutions to employing the numbers of people manufacturing once did in a high-cost country such as the United States. Global competition for those jobs has changed the equation. Business is about value, and Value = Benefit – Cost. Let’s abbreviate as V = B – C, and call subscripts d and i as Domestic and International. When Ci < Cd, Bd MUST be larger than Cd – Ci. Otherwise Vd is lower, and the jobs will move to i. What you say is we must raise Bd. We have done that, but unfortunately it's much easier with machines than with people. Especially when some people are just not up to the task of being an engineer. We're witnessing a transition to computers and automation that is going to leave behind a lot of people.

That’s certainly true. But its also true that a rising tide floats all boats. And if we can continue this remarkable renaissance in manufacturing, what we might lose in low-skill jobs, we’ll be able to offset in the kinds of jobs (and companies) needed to support, maintain and fuel all that automation and its ever-expanding output.

Thank you for your comments, and here’s to a little clearer foresight to go along with all that 20/20 hindsight. Manufacturing is making a comeback, and I sense is that even as the economy struggles to regain its proper footing, the industrial community will continue to re-establish its rightful place in the hierarchy of American employers.

I see the same image the politicians and pundits see. I see “workers lined up outside of a sprawling industrial campus, with its belching smokestacks and its massive storage facilities.” Only I see it when I visit Monterrey, Mexico. What I see in the United States is either high-efficiency, high-tech plants as you describe or plants teetering on the edge of disaster with managers operating like it’s still the “good old days” (just like the politicians and pundits).

You’re absolutely right, Michael. We need to find some way of balancing the old and the new. For manufacturing to continue its recovery in the U.S., it’s imperative that companies somehow become more efficient and nimble, while at the same time be given the freedom to adjust to the demands of the global marketplace.

What’s comforting though, is that for the first time in decades Americans are talking about the need to get back to our manufacturing roots, and to once again start building things. That attitude, frankly, has been a long time coming.

What are your feelings about technical schools for training the new workforce? I feel that as a country we got away from sending our best and brightest into manufacturing. “Trade schools” were for the kids who couldn’t go to a four-year liberal arts school. Any thoughts on training the new workforce?

It’s funny you should mention that. A front page story in the NY Times last week has me working on a blog post covering that very topic. In short, we need to re-invent manufacturing in the minds of kids. They need to view a career making things, not as blue collar, like their parents did, but as noble, dignified and sustainable.

We don’t need to reinvent the manufacturing job, any more than we need to reinvent the wheel. The Germans are doing what we should be doing with their “Mittelstand” manufacturing base. Their economy sustains relatively high unemployment, but also high productivity and quality of life.

An even better example are the Swiss. They are a manufacturing and exporting country as well as a financial country, with a highly skilled work force. Their economy sustains a very low unemployment, and until the recent run up of the Swiss franc, also a high standard of living/quality of life.

Once we stop this extravagance of exporting fabrication and maintaining unsustainably long supply chains in the pursuit of marginal cost savings, we’ll rediscover our own innovative way to manufacture that can compete in the world marketplace.

Thanks for the comments, Scott. And well said, particularly about marginal cost savings. Though I still think it’s about uncovering the hidden and the long-term costs of off-shoring jobs and importing finished products.